The Property Franchise Group (TPFG:AIM)

Price: 567p

Gain to date: 37%

When we recommended multi-brand lettings and estate agency franchising firm The Property Franchise Group (TPFG:AIM) on 24 April, we said it represented a more attractive way to play growth in the UK residential property sector than buying traditional housebuilders.

Our call has played out nicely, with the shares up more than a third while most of the major developers are still nursing hefty losses for the year.

WHAT HAS HAPPENED SINCE WE SAID BUY?

When we spoke with chief executive Gareth Samples back in April, he was appreciably upbeat about the success of the Belvoir takeover which, in his own words, had transformed TPFG into something akin to a new business thanks to the scale it has brought.

That step-change in the business was evident when the firm posted its half-year trading update at the start of August, with group revenue increasing 50% to £40.3 million while like-for-like revenue was 8% ahead of last year.

Management service fees from lettings rose 24% to £10.4 million, with underlying growth of 5% and an additional two months of Belvoir revenue, while franchising revenue rose 22% to £12.2 million.

Financial services revenue increased by 54% to £12.2 million, thanks to a ‘strong upturn’ in property sales and lower mortgage rates on the back of Bank of England rate cuts, while underlying growth was a still respectable 14%.

WHAT SHOULD INVESTORS DO NOW?

In August, the firm said it saw a slight softening in new instructions but thanks to its strong sales pipeline reiterated its confidence in meeting its second-half revenue targets.

With the first-half results themselves scheduled for 10 September, we think investors should stick with The Property Franchise Group as it continues to benefit from and build on its newly-attained scale. 

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